The Health Benefits of Obama's IT Obsession

Beyond his well-documented love for his BlackBerry, President Barack Obama seems to have extended his fondness for IT into the health-care field as well. The new stimulus package that the House passed includes $20 billion to help get health information technology off the ground; the Senate version might have even more money thrown into the problem.

Digitize this
The expense of setting up a digital record system has left many doctors still scribbling their notes on pen and paper. The necessary computers and programs can cost doctors tens of thousands of dollars. And while such a system benefits patients immediately, the long-term payoff for doctors comes from lower labor costs, which can take years to recoup.

To alleviate the barrier, the stimulus package includes money for grants and loans for doctors and hospitals to set up electronic medical records. A lower net cost for end users should drive sales for companies that provide the systems, including Quality Systems (Nasdaq: QSII  ) , Allscripts-Misys Healthcare Solutions (Nasdaq: MDRX  ) , Cerner (Nasdaq: CERN  ) , and athenahealth (Nasdaq: ATHN  ) .

And if that wasn't enough, the Centers for Medicare & Medicaid Services are also pushing for doctors to get online. The agency said it will pay an extra bonus to doctors who file their prescriptions electronically. All told, the combination of grants from the stimulus package and bonuses from CMMS could completely pay for the cost of setting up the system.

Bystander benefits
While the companies providing doctors with hardware and software will clearly benefit most from the stimulus package, some bystanders are also poised to benefit indirectly.

Many companies, from Google (Nasdaq: GOOG  ) to Microsoft (Nasdaq: MSFT  ) to UnitedHealth Group (NYSE: UNH  ) , have designed websites to store patients' complete medical records, combining records from different sources like doctors and pharmacies. While I think that's a fantastic idea, with almost endless benefits for users and providers alike, very few people will realistically take the time to enter their medical history into one of these databases. Whatever benefit the patients get from having their medical records stored in one place doesn't make up for the time and effort they'll need to decipher their doctor's chicken-scratch handwriting, and then figure out how to get it into the website.

Personally, even with a degree in biology and handwriting so illegible that I'm actually able to read what's on a prescription pad, I'm not willing to go through the effort. I doubt many others are, either.

But if the doctor is doing the heavy lifting and digitizing the results, then it's just a matter of getting the doctor's digital records into the database. In fact, Google Health already has an import function set up for patients of Beth Israel Deaconess Medical Center and the Cleveland Clinic, among others. The more patients with digitized records, the more successful these websites will be.

Counting on Congress
The biggest risk in investing in health IT right now is that many people have apparently already gotten the same idea. The growth of health IT hasn't been a secret, and the companies mentioned above are currently beating the S&P 500 over the last three months -- several by 40-point margins. There's a remote possibility that the funds to pay for health IT upgrades never materialize, but an even bigger risk that the whole idea of digital medical records may have been overhyped.

Growth companies are capable of big returns, even in bear markets. Investing Fools just have to make sure they aren't overpaying for the privilege. Waiting until a quarter after the stimulus package kicks in might cost you some gains, but it's also likely to considerably lower your risk.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. UnitedHealth and Microsoft are Inside Value picks. UnitedHealth and Quality Systems are Stock Advisor picks. The Fool owns shares of UnitedHealth. The Fool's disclosure policy is always completely legible.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 02, 2009, at 12:08 AM, ganzemacher wrote:

    While it would be a benefit to have all of one's medical information in one place for one's doctors to access, unless and until there is absolute security, I will be against the forced use of such a system. Every week, it seems some moron has misplaced a laptop or flash drives with the personal information of millions of people. So, besides the resultant instances of identity theft, whoever gets this information will have even more personal information. I would much rather carry a copy of my medical file from one doctor to another than trust it to a database.

  • Report this Comment On February 09, 2009, at 9:26 PM, alextelcom wrote:

    Free Digital Medical USB drives are being donated to companies for there employees, there families and customers. Alex Papas, has been credited for creating and developing the prepaid phone card in the United States. Since starting the prepaid phone card industry he has helped major companies get their name and products into the market place. Companies include Verizon, Sprint, PT-1 and Playboy to name a few. He has now again created and developed another great product for everyone called the Medefile Card.MedeFile's centralized, confidential electronic portfolio gives everyone 24/7 access to there medical history. Hospitals, Doctors, EMT’s and all other Emergency personnel are now relying on Digital Medical Records. Emergency personnel now know in an instant who you are, your blood type, your allergies and your emergency contacts. Knowing that, could say your life. Also you now don’t have to waste time filling out paperwork when you go to the doctor or the hospital. The USB drive fits on your key chain. So now, just hand your MedeDrive to the receptionist it’s that simple. Papas is donating $100 million in MedeDrive’s to companies & charities now. Papas has already donated Medefile Cards to the Lupus Foundation, CBS Radio, Marriot Hotels, Lowes Hotels, Child Life Foundation, to name a few. To see how it works go to www.medefilecard.com Contact Alex Papas for more details 954 729 8888 or email alextelcom@aol.com

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